4. Areas where NRAs can have a coordinating function
4.2. Standardisation
M2M devices need common, interoperable technical standards if regional or global markets are to yield significant economies of scale. Standardisation can intervene at different levels, such as the application104 and connectivity layers. All along the service chain, a balance shall
be struck between openness, interoperability, easiness, innovation and investment.
The potential trade-off between incentivising innovation by allowing proprietary solutions to be developed in a competitive process and increasing interoperability with the help of standardization processes is well-known.
In general, when a new application is introduced into the market, particularly if this application is as innovative as M2M-services, partnerships may have an important role as they help the service to spread out and to get regular improvements. Interviews conducted by BEREC in 2014 showed that many M2M applications were developed in a vertical way, with specialised and proprietary solutions, often created by partnerships of connectivity service providers, M2M users and M2M service providers (e.g. Global M2M Association, M2M World Alliance, Bridge M2M Alliance).
However, again according to these interviews, the proprietary solutions developed by the aforementioned partnerships and alliances often appear incompatible with each other. This situation may create switching barriers commonly referred to as the “lock-in” problem: the M2M
user becomes dependent on a connectivity service provider (or a M2M service provider which is member of a specific alliance) for products and services, and he is unable to use another provider without substantial switching costs, due to the need to change apparatus, remote devices, etc.
Where such co-operation with regard to proprietary solutions violates competition rules (such as the prohibition of anti-competitive agreements and/or the abuse of a dominant position laid down in Art. 101 and 102 of the Treaty on the Functioning of the European Union and corresponding national laws) competition authorities would be competent to take appropriate measures. Otherwise, there is little scope for NRAs to intervene.
Still, the ease of switching between connectivity service providers as well as M2M service providers is important in order to create a competitive environment for M2M services.
For this reason, some stakeholders highlighted the necessity of standards to abolish switching barriers, solve the lock-in problem and help the future development of M2M services: in fact, the presence of standards could reduce the cost in realising M2M applications because research and development costs may be shared.
However, also co-operation with regard to standardisation has to respect competition law. In essence, where participation in standard-setting is unrestricted and the procedure for adopting the standard in question is transparent, standardisation agreements which contain no obligation to comply with the standard and provide access to the standard on fair, reasonable and non-discriminatory terms will normally not restrict competition.105
Among others, ITU-T has carried out standardisation initiatives related to the IoT under the Global Standards Initiative on IoT (IoT-GSI).106 Its goal was to promote “a unified approach in
ITU-T for development of technical standards (Recommendations) enabling the Internet of Things on a global scale”.107 Such an initiative dates back to a report on the Internet of things
from 2005.108 ITU has in the meantime taken more concrete steps in a Recommendation ITU-
T Y.2060 from June 2012.109 The IoT-GSI concluded its activities in July 2015 and the new
ITU-T Study Group 20 “IoT and its applications including smart cities and communities”110 was
established. All ongoing activities in the IoT-GSI were transferred to the new SG20.
As for standardisations bodies, since 2006, IETF (Internet Engineering Task Force) has also produced a series of standards and protocols designed for the IoT.111 Besides, the initiative of
ETSI focused on the development of an application-independent ‘horizontal’ service platform seems to be an important step.112
Besides, the “OneM2M” initiative was founded in 2012 by seven international standards bodies in order to set up “a common efficient, easily and widely available M2M Service Layer”.113 To
date, this initiative consists of 202 members (mainly from the industry), associate members (government and regulatory agencies) and partners (standards bodies). Although common standards in the application environment also play a significant role, the initiative’s objective is not, however, “to standardise the whole environment across networks, applications and devices [but the] interfaces so they are applicable to the entire ecosystem.”114
A recent study prepared for the European Commission stressed that “Current solutions and implementations tend to have a strong vertical market component, but in time broad-based, open horizontal platforms will emerge, especially if Europe will be able to insure open standards and widespread interoperability.”115 It also pointed out that a “lack of standards and
interoperability across fragmented European markets preventing economies of scale and scope.” Therefore it came to the conclusion that “The EC should help developing the internal single market for IoT services and applications, by promoting the adoption of open standards and interoperable solutions across Europe, fostering the cooperation between standard bodies, pointing out relevant regulatory barriers and suggesting remedial actions.”
In order to take appropriate actions, the competences of European Union institutions and NRAs over standardisation matters and their relations with CEPT, standardisation institutions and standard bodies’ alliances shall firstly be identified. Then it shall be assessed whether the current situation is satisfying in regard of the objectives set out above. The activity of European Union institutions and NRAs regarding standards may go from mere vigilance to a more active role, by issuing recommendations for instance.
As regards the lock-in issue in particular, the potential impact of open or proprietary standards on the development of M2M services and the competitiveness of the market in general shall be further examined in full co-operation with stakeholders before taking any action.
[QUESTION TO STAKEHOLDERS: What is the impact of open and proprietary standards on the development of the M2M sector? What are the advantages and disadvantages of open and proprietary standards, taking in account that M2M services may be provided on private or public networks?]
Standards play a significant role in the development of M2M technologies as they define openness, interoperability and ultimately competitiveness in the M2M environment. Standardisation bodies are already addressing the issue of standardisation in the M2M environment in a significant manner. The role of NRAs and European Union institutions over standardisation matters is to be defined in this respect but also in regard of their respective capacity to address standardisation issues respecting technological independence principle.
Glossary
Connected device Device/Product in which an M2M device is integrated (e.g. connected car, smart meter).
Connectivity service provider: Provider of an electronic communication service pursuant to Art. 2 lit. c Framework Directive, i.e. basically a service normally provided for remuneration which consists wholly or mainly in the conveyance of signals on electronic communications networks […].
E.164 number A string of decimal digits that satisfies the three characteristics of structure, number length and uniqueness specified in [ITU-T E.164]. The number contains the information necessary to route the call to the end user or to a point where a service is provided.
E.212 number See IMSI, MCC, MNC and MSIN.
End-user: Customer at the end of the value chain who purchases a connected device (including an M2M service and/or M2M device) (e.g. car owner, electricity customer). An end-user may be a private person or a company (e.g. private car owner and/or company with a car fleet).
IMSI International mobile subscription identity: [ITU-T E.212] „IMSI is a string of decimal digits, up to a maximum length of 15 digits, which identifies a unique subscription. The IMSI consists of three fields: the mobile country code (MCC), the mobile network code (MNC), and the mobile subscription identification number (MSIN)“.
M2M service provider: Provider of an M2M service, which can comprise the provision of an M2M platform and/or other M2M related IT- services/solutions.
M2M user: Purchaser of an M2M service who incorporates the M2M service as one component in his own products and/or services (e.g. a car manufacturer, an electricity provider who also includes a smart meter in his services).
MCC Mobile country code: [ITU-T E.212] The MCC is the first field of the IMSI and is three digits in length and identifies a country. The Director of TSB may assign more than one MCC to a country. MCCs in the 90x range are administered by the Director of TSB.
MNC Mobile network code: [ITU-T E.212] The MNC is the second field of the IMSI, it is two or three digits in length and is administered by the respective national numbering plan administrator. The MNC, in combination with the MCC, provides sufficient information to identify the home network.
MSIN Mobile subscription identification number (MSIN): [ITU-T E.212] The MSIN is the third field of the IMSI, it is up to 10 digits in length, and is administered by the relevant operator to identify individual subscriptions.